Solar electricity is expected to become competitive with other forms of electricity in an increasing number of markets globally due to declining solar panel and installation costs, according to a new report.

By 2030, solar power will generate $5 trillion in revenue worldwide, a 10-fold increase over today, according to the report from Deutsche Bank (PDF).

Deutsche Bank

Nearly every cost for installing solar, from panels to inverters, is on the decline.

Today, unsubsidized rooftop solar electricity costs between $.08 and $0.13 per kilowatt hour of capacity (KWh), or 30% to 40% below the retail price of electricity in many markets globally. This is unsubsidized, meaning there are no government incentives such as tax credits.

In markets heavily dependent on coal for electricity generation, the ratio of coal-based wholesale electricity to solar electricity cost was 7:1 four years ago. This ratio is now less than 2:1 and could approach 1:1 over the next 12 to 18 months, the report stated.

The 185-page report, released last week, predicts 12 gigawatts (GW) of new solar will be installed this year and 16GW next year, which would bring the U.S. total to 50GW of photovoltaic capacity. Anywhere from 20GW to 30GW of that new total will come from distributed generation or rooftop solar versus utility installations.

"Over the next 20 years, we expect nearly 10% of global electricity production to come from solar. Bottom line: we believe the solar industry is going through fundamental change and the opportunity is bigger than it has ever been before," wrote Deutsche Bank analyst Vishal Shah.

Last year, the International Energy Agency (IEA) released a pair of reports that predicted solar would be the world's leading electricity source by 2050.

"By 2017, even the drop in utility installations [being predicted] will be mitigated by the strength in distributed generation," the report, titled "Crossing the Chasm," stated.

On average, solar capacity has grown 30% every year for the past 20 years. Even so, solar power only represents about 1% of the 6,000GW of capacity in the $2 trillion electricity market, the majority of that dominated by coal-fired power plants. In order for solar to produce 100% of the world's energy, the current installed base of solar power would need to increase 120 fold.

Over the next 20 years, the electricity market is expected to double to $4 trillion, and solar power will grow by 10 times. During the next two decades, the solar industry is expected to generate $5 trillion of revenue, and by year 2050, the amount of solar power capacity is expected to grow to represent 30% of all electrical power generated worldwide, the report said.

"The top 10 electricity-producing nations in the world generated over 16,000 terawatt hours (TWh or trillion watts) of electricity in 2013 and it would take roughly 12,000GW of solar to produce the same amount of electricity. Clearly, the total addressable market size is huge," the report stated.

Solar capacity is expected to grow more rapidly in developing economies than in established ones. For example, China and India both expect to deploy an additional 100GW of solar power capacity by 2022, though specifics for how either country will do so are uncertain.

Today's current installed generating capacity in India is about 280GW; that figure is estimated to reach 800GW by 2035, according to Shah.

"Assuming installed generating capacity reaches 400GW by the 2022 timeframe, solar penetration would reach 25% of total capacity and nearly 60% of new installed capacity would be from [the] solar sector," Shah wrote.

Deutsche Bank

Two years ago, the top 10 states for deploying solar represented 90% of the capacity, but that is quickly changing with greater adoption.

In many U.S. states, the cost to purchase solar power is on par with traditionally generated power. Even before adding in government subsidies such as tax credits, solar is currently competitive in more than 14 U.S. states, Deutsche stated.

By the end of next year, about 47 states (including Washington DC) will be at grid parity, Deutsche predicted.

One of the factors spurring growth is the expiration of the federal government's solar investment tax credit (ITC). That measure, passed in 2008, offered a 30% tax credit for residential and business installations. When it expires in 2016, the tax credit will drop to a more permanent 10%.

"Therefore, we expect a significant rush particularly in the residential segment, as large installers rush to complete as many installations as possible while the economics are best," the report stated.

Deutsche Bank

Solar power capacity in the U.S. is growing at staggering rates.

The cost of small (less than 20KW of capacity) distributed generation systems, such as those on residential rooftops, generally ranges from $2.50 to $4.00 per kilowatt hour of capacity.

"We see solar becoming increasingly mainstream as it passes cost competitiveness with traditional forms of generation," Shah wrote. "While we will likely see some utilities fight at every step of the way (because it threatens their business model), we expect system economics will ultimately win in the longer run."